These are the best semiconductor stocks to buy now.
Semiconductor stocks performed extremely well in 2020, and analysts are expecting more great things in the space in 2021. The semiconductor industry was one of the most insulated from the health crisis. Consumer electronics sales are booming, and trends such as cloud computing and online gaming have generated tremendous tailwinds for the semiconductor and semiconductor equipment market. In 2021, semiconductor stocks will again benefit from a handful of bullish trends, including 5G and other infrastructure investments, an auto market rebound and further penetration of cloud services. Here are seven of the best semiconductor stocks to buy, according to CFRA.
Nvidia Corp. (ticker: NVDA)
Nvidia has been an all-time great long-term investment over the past decade. The stock is up a mind-boggling 2,260% in that time, but analyst Angelo Zino says Nvidia still has room to run in 2021. Zino says data centers and gaming will continue to drive demand for Nvidia’s graphics cards and mobile processors. In the longer term, artificial intelligence and autonomous vehicles will generate increasingly heavier workloads and demand greater processing speeds. Zino is also bullish on Nvidia’s Arm Holdings buyout, but says the deal faces regulatory risks. CFRA has a “buy” rating and $580 price target for NVDA stock.
ASML Holding (ASML)
ASML is one of the world’s largest semiconductor manufacturing equipment suppliers. Analyst Jun Zhang Tan says the global transition to 5G wireless networks and the general increase in high-power computer applications should support demand for ASML’s lithography equipment. Improvements in memory supply and pricing are also bullish trends for ASML. In the most recent quarter, ASML reported impressive 33% year-over-year net sales growth, and Tan is forecasting 46.6% earnings per share growth in 2021. Tan says growth in high-margin extreme ultraviolet lithography sales will boost overall margins. CFRA has a “buy” rating and $435 price target for ASML stock.
Broadcom is a global designer, developer and supplier of analog semiconductor devices. Broadcom recently reported 11.9% revenue growth and 56.3% net income growth in the fourth quarter. Zino says 5G device sales appear to be tracking ahead of his expectations, and those devices contain significantly higher radio frequency content than 4G devices. Zino is anticipating a slow improvement in enterprise data center spending in the first half of the year. In addition, he says cloud spending should remain elevated for the time being. CFRA has a “strong buy” rating and $510 price target for AVGO stock.
Qualcomm’s advanced wireless broadband technology makes the company one of the biggest potential winners of the global 5G upgrade cycle. Zino says Qualcomm’s expanding product portfolio provides diversification and growth opportunities. He is also encouraged by the company’s licensing agreements with major Chinese companies. He says Chinese base station deployment is good news for Qualcomm’s Snapdragon offerings. The company’s long-term licensing agreements ensure a level of earnings, margin and cash flow visibility that is rare in today’s tech sector. Zino is projecting 57% EPS growth in 2021. CFRA has a “buy” rating and $160 price target for QCOM stock.
Advanced Micro Devices (AMD)
Like Nvidia, Advanced Micro Devices has been a spectacular long-term investment over the past decade, gaining more than 1,000% overall. Despite the big run, Zino says AMD has several bullish catalysts in the near term. First, he says AMD’s next-generation EPYC processor should help the company continue to gain market share from Intel Corp. (INTC) and others in the data center central processing unit market. In addition, Zino says AMD’s graphics cards business is booming as well. Finally, he says AMD’s balance sheet is improving, reducing investor risk. CFRA has a “buy” rating and $100 price target for AMD stock.
NXP Semiconductors (NXPI)
NXP Semiconductors produces high-performance, mixed-signal chips for the auto, mobile payment and other end markets. Zino says NXP is positioned to gain market share in both the auto and mobile payment markets in 2021. NXP is particularly exposed to electric and autonomous vehicle technology, two high-growth, long-term investing opportunities. An auto market rebound in 2021 would also be a tailwind given auto sales account for about 47% of NXP’s total revenue. Zino is projecting 12% revenue growth and 30.9% EPS growth in 2021. CFRA has a “strong buy” rating and $160 price target for NXPI stock.
Skyworks Solutions (SWKS)
Skyworks specializes in radio frequency and other system solutions for wireless mobile devices. Zino says the transition to 5G technology among Skyworks’ existing customers will be a tremendous bullish catalyst for the stock. At the same time, he says Skyworks has an attractive valuation, priced at only about 20 times forward earnings. Skyworks also has a pristine balance sheet, including no debt and nearly $1 billion in cash. Zino says Skyworks has long-term opportunities to expand its presence in the auto and Internet of Things markets. CFRA has a “strong buy” rating and $160 price target for SWKS stock.
Buy these semiconductor stocks:
— Nvidia Corp. (NVDA)
— ASML Holding (ASML)
— Broadcom (AVGO)
— Qualcomm (QCOM)
— Advanced Micro Devices (AMD)
— NXP Semiconductors (NXPI)
— Skyworks Solutions (SWKS)
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